Preliminary Results

Optimal Payments Plc

Audited Results for the year ended 31 December 2011

Thursday, 29 March 2012 - Optimal Payments Plc (LSE: OPAY) ("Optimal" or the "Group"), a leading provider of online payments, today announces its results for the year ended 31 December 2011.

Highlights

·; EBITDA(1) up 56% to $17.5m (2010: $11.2m); revenues more than doubled to $127.9m (2010: $61.5m).

·; Transformational acquisition of Optimal Payments Inc. ("OP Inc.") Straight Through Processing ("STP") business concluded on 1 February 2011 - Group renamed Optimal Payments Plc from NEOVIA Financial Plc.

·; Balance sheet remains strong with total Group cash of $43.6m net of merchant cash (2010: $54.1m). Following the acquisition the Group has convertible loans of $29.5m.

·; Integration of the two STP platforms under the NETBANX brand largely complete. NETBANX STP now represents two thirds of revenues.

·; Major investment in NETELLER Stored Value ("SV") platform now complete.

·; Unified business under single leadership with Joel Leonoff becoming CEO in August 2011.

·; Strong sales pipeline and current trading underpin prospects for further growth in 2012.

Financial summary (audited)

Year ended 31 December 2011 2010

Revenue

NETBANX Straight Through Processing (STP) 86.8 17.0

NETELLER Stored Value (SV) 40.0 43.7

Investment income 1.1 0.8

Total revenue 127.9 61.5

EBITDA (1) 17.5 11.2

(1) EBITDA is defined as results of operating activities before depreciation and amortisation and exceptional non-recurring items.

Commenting on today's results, Joel Leonoff, President & CEO, said:

"2011 was a defining year in the Group's recent history as the acquisition of OP Inc. in February 2011 transformed the business. Revenues more than doubled to $127.9m from 2010 and the strong second half performance, particularly from the Group's NETBANX STP division, demonstrated significant organic growth.

The Group is now one of the leading players in the online payments market, which has seen considerable consolidation and corporate activity in recent years.

We have made real progress in moving our technology to the forefront for both the NETBANX STP and NETELLER SV businesses. New partnerships with companies such as Desjardins Bank in Canada validate our strengths in this regard, and exemplify the excellence of our technology as a cornerstone of our business.

The acquisition of OP Inc. helped double revenues in a pivotal year for the Group. We are pleased with the 2011 results and look forward to building upon the solid foundation we have established over the last year. Our prospects and sales pipeline are robust. The Group has an operationally geared business with a large proportion of the cost base fixed in the short term, which means that relatively small changes in revenue have a larger impact on EBITDA. We believe that this model, combined with our growth trajectory and attractive prospects, positions the Group well for 2012 and beyond.

Trading in the year to date has been in line with management's expectations. The NETBANX STP division now represents the largest part of the business, and this has helped to reposition Optimal Payments as one of the leading providers of online payments. As a result, the Board is confident about the Group's prospects going forward."

For further information contact:

Optimal Payments Plc

Joel Leonoff President & CEO

Keith Butcher CFO

Andrew Gilchrist EVP Corporate Affairs + 44 (0) 1624 698 713

Email:  [email protected]

Citigate Dewe Rogerson + 44 (0) 207 638 9571

Angharad Couch / Priscilla Garcia

Canaccord Genuity Limited + 44 (0) 207 050 6500

Simon Bridges / Kit Stephenson

Analyst meeting and further information

Optimal Payments will hold a briefing for invited UK-based analysts at the offices of Citigate Dewe Rogerson, 3 London Wall Buildings, London, EC2M 5SY, at 9.30 a.m. today. From this time, copies of the analyst presentation will be available on the Company's website, www.optimalpayments.com.

* * * * *

About Optimal Payments Plc

Trusted by businesses and consumers in over 180 countries to move and manage billions of dollars each year, Optimal Payments Plc is a leading independent payments company offering a true alternative to banks and card schemes. Merchants use the NETBANX® processing service to simplify how they accept and settle card, direct-from-bank, e-wallets and cash payments; and the NETELLER® payment account to increase margins, capture new customers and increase their lifetime values. Being independent has allowed the company to support tens of thousands of retailers and merchants in many countries and across multiple industries.

Optimal Payments Plc is quoted on the London Stock Exchange's AIM market, with a ticker symbol of OPAY. Subsidiary company NETELLER (UK) Ltd is authorised and regulated as an e-money issuer by the UK's Financial Services Authority (FSA).

For more information about Optimal Payments visit www.optimalpayments.com or subscribe at

www.optimalpayments.com/feed/

CEO's Review

Introduction

2011 was a defining year in the Group's recent history as the acquisition of OP Inc. in February 2011 transformed the business. Revenues more than doubled from 2010 to $127.9 million and the strong second half performance, particularly from the Group's NETBANX STP division, demonstrated significant organic growth.

The enlarged Group is markedly different than the former NEOVIA Financial was at the end of 2010. The Group's NETBANX STP division now accounts for approximately two thirds of 2011 revenues with the majority of this generated from outside of gaming. As a result, the proportion of revenues derived from gaming related merchants fell from 90% of total Group revenues in 2010 to under 60% in 2011. Geographically, the business now has a substantial presence in the North American market, as well as strong market positions in Europe and Asia.

The Group is now one of the leading independent players in the online payments market, which continues to feature considerable consolidation, and the Board believes the Group is well positioned for further growth in 2012 and beyond.

Integration and Rationalisation

The two businesses came together during 2011 and were combined under a single management team from mid 2011. The two STP platforms were successfully integrated under the NETBANX brand, with this division showing substantial second half growth.

The integration programme included a reduction in headcount in July 2011 and a further rationalisation in March 2012, focused on the Group's SV business, which we believe has now right-sized the business and positioned the Group for sustained improvements in profitability. The Group currently has 353 employees, a reduction of approximately 75 since the acquisition on 1 February 2011. The Group also completed its major investment in the new platform for the NETELLER SV business early in 2012 and the level of capital investment in this business will substantially reduce going forward.

NETBANX STP Division

The Group's NETBANX STP business saw strong growth, particularly in the second half, with full year revenues of $86.8m ($17.0m in 2010). The majority of this business is not gaming related. The second half growth was partially seasonal due to Q4 growth in travel and retail but there was also robust organic growth from existing customers in Asia and Europe and from new customers added during 2011, such as Dealfind, Ford Credit, MoreTh>n and Shop Direct Group's Littlewoods Europe and Very.com.

We have made real progress in moving our technology to the forefront for both the STP and SV businesses. New partnerships with companies such as Desjardins, a leading Canadian bank with whom we recently launched an internet payments gateway solution, validate our strengths in this regard and exemplify the excellence of our technology as a cornerstone of our business.

Customer retention remains extremely high as NETBANX provides a large range of payment and fraud prevention services through a single customer integration as well as access to more than a dozen acquiring banks worldwide. This business model, together with investment in an expanded sales team operating from our UK offices in London and Cambridge, underpin our confidence that NETBANX can continue to win business in all territories, particularly in Europe.

The NETBANX business has seen a blended gross margin of around 45% with the bulk of the direct processing costs being fees to acquiring banks. Lower risk merchants typically command lower fees and, consequently, the margin varies by merchant type and size. The underlying platform is scalable, allowing large numbers of new customers to be added without any material addition to the fixed costs of the business.

NETELLER Stored Value ("SV") Division

The Group's NETELLER SV business (comprising the NETELLER eWallet and Net+ prepaid card) performed in line with market expectations, achieving revenues of $40.0m (2010: $43.7m). This was also in line with 2010 on a like-for-like basis when the discontinued Asia e-wallet revenues are excluded. This total includes approximately $2m of revenue from the expiry of e-money balances which will not recur due to regulatory changes.

The Group's new NETELLER SV platform went live at the end of 2010 and significant investment in the platform continued throughout 2011 to provide additional functionality that was put on hold while the new platform was being developed. This continued investment concluded in Q1 of 2012, allowing the IT development team to be significantly downsized. As a result, the investment and cash outlay expended on the NETELLER SV business will be substantially reduced going forward.

The employee downsizing in March 2012 followed headcount reductions in July 2011, both aimed at right sizing the cost base of the NETELLER SV business, which we believe has now been achieved. On reviewing the projected cash flows for the NETELLER SV business in light of current market conditions in the online gaming sector, the Directors concluded that an impairment charge of $21.3m related to the platform was appropriate. Nonetheless, the NETELLER SV business remains a key strategic component of the Group's product offering. In 2011, the NETELLER SV service was expanded into new countries and territories which, along with innovative partnerships and other differentiating initiatives, are expected to increase market share primarily in the European gaming market where NETELLER SV remains one of the two key eWallet players.

There is also significant potential upside for the NETELLER SV business in the event that the US online gaming market re-opens as a result of liberalisation of related regulations. A clarification of the Wire Act in December 2011 appears to indicate that casino and poker are not illegal under the Act - however, there is no certainty that this means that the market will open for online casino and poker given the complexities of state and federal laws. The Group continues to monitor developments in the US market and position itself to take advantage of opportunities from entry to the world's most lucrative online gaming market.

The Group also continues to investigate a white label offering for traditional retail merchants. These merchants can realise meaningful benefits, including increased customer loyalty and retention, from an online payments solution that enables shopping on the move and effectively bridging the online and offline worlds.

The predominantly fixed cost gearing of the NETELLER SV business (as illustrated in note 14 of the Report and Accounts) means that modest uplifts in revenues will largely fall through to the bottom line.

Operational Achievements

The acquisition of OP Inc. on 1 February 2011 resulted in substantial change for the Group, the most important of which are as follows.

Management team - The management team was streamlined during the year with Mark Mayhew stepping down as Co-CEO in July and Danny Chazonoff taking over as Group COO around the same time. Each of the functional organisations for Sales and Marketing, Risk, and Technology was combined under single leadership, as the Group leveraged the expertise of management from the acquired business.

Integration of STP platforms under NETBANX brand - As a result of the combination of businesses, the STP division has integrated the original NETBANX platform operated from the Cambridge office with the OP Inc. platform managed from Montreal and these now operate under the combined NETBANX brand. The OP Inc. platform brought enhanced reporting, high reliability and integration with multiple acquiring banks on a number of continents, providing a world class offering that can be tailored to any merchant requirements. The integration is largely complete with the best features of both platforms now offered to all of the Group's STP merchants.

Completion of NETELLER SV platform - The new NETELLER SV platform went live at the end of 2010 after several years of development and at considerable cost. Further investment was required after the platform went live to add functionality that was put on hold during the development phase. This investment continued throughout 2011 and is now complete, allowing the Group to considerably downsize the IT and product teams in March 2012, leaving a smaller team in place to maintain the system and to add modest tactical enhancements going forward.

Business transformation programme - Rationalisation of the business included a number of cost reduction programmes largely focused on the NETELLER SV business. These included headcount reductions in July 2011 and further material expense reductions in Q1 2012 which we expect to deliver savings of over $7m on an annualised basis. The SV business is now appropriately sized to function effectively and the Group does not envisage any further material headcount reduction. The number of employees in the business was 387 at 31 December 2011, down from 430 after the acquisition, and this has further reduced to 353 at the date of this report.

The Group continues to pursue simplification of operational processes and improvements to the organisation's effectiveness and ability to deliver for our customers.

Strategy

The Group's defined growth strategy focuses on being a leader in online payments through its two businesses, NETBANX STP and NETELLER SV. The Group's strength is based on two key principles: innovation and differentiation.

In both STP and SV, innovation in operating platforms and technology underpins Optimal Payments' competitive advantage. By offering tailored solutions, the Group has and will continue to attract new business, delivering growth in revenues. Channel opportunities, such as the NETBANX partnership with Desjardins, will create additional opportunities to grow the STP business by leveraging Desjardin's reach, reputation and market presence. In the SV business, innovative enhancements and partnerships are expected to restore revenue growth in the medium term.

Longer term, the Group sees opportunities for the SV and STP businesses in new geographic markets, such as the US, particularly in the event that regulation of the online gaming market liberalises, and also in new verticals such as retail, where bridging the online and offline worlds has the potential to bring many benefits, from a payments perspective, for merchants and customers alike.

Current trading and Outlook

The acquisition of OP Inc. helped double the Group's revenues in a pivotal year for the Group.We are pleased with the 2011 results and look forward to building upon the solid foundation we have established over the last year. Our prospects and sales pipelines are robust. The Group has an operationally geared business with a large proportion of the cost base fixed in the short term, which means that relatively small changes in revenue have a larger impact on our EBITDA. We believe that this model, combined with our growth trajectory and attractive prospects, position the Group well for 2012 and beyond.

Trading in the year to date has been in line with management's expectations. The NETBANX STP division now represents the largest part of the business, and this has helped reposition Optimal Payments as one of the leading providers of online payments. As a result, the Board is confident about the Group's prospects going forward.

Joel Leonoff

President & CEO

28 March 2012

Business Overview

Optimal Payments has two main lines of business:

NETBANX Straight Through Processing ("STP"), comprised of payment gateway and bureau services

NETELLER Stored Value ("SV"), comprised of NETELLER eWallet and Net+ card businesses

NETBANX STP

The Group's STP business, NETBANX, provides payment processing services for merchants whose customers transact principally online. NETBANX processes both card and non-card payments for a very diverse set of North American and European eCommerce businesses, including Shop Direct Group, Dealfind, CN Rail, Ford Credit, MoreTh>n, Ritchie Brothers, NPower, BeyondTheRack.com and TrendMicro. NETBANX provides a fully PCI DSS Level 1 compliant and certified service for multi-channel cardholder-not-present transactions, including web, IVR,call centre, mail-order, and telephone-order purchases. NETBANX processes all major credit cards including Visa and MasterCard, with additional payment support for global processing of American Express, NETELLER, PayPal, Ukash, and direct-from-bank payments such as iDEAL, Giropay and Direct Debit - all through a single integration, via multiple acquiring banks.

NETBANX earns fees for processing online transactions either as a fixed fee per transaction (the "gateway" model) or as a percentage of the transaction value (the "bureau" model, where the Group takes on the risk of managing the transaction process instead of an acquiring bank).

STP - Bureau

Merchants are able to directly accept and settle card payments through the NETBANX service without the complexity and cost of managing an additional bank acquiring relationship. This is termed a "bureau" offering. NETBANX's bureau business processed $2 billion in transaction value in 2011, substantially ahead of 2010.

The acquisition of OP in early 2011 added considerable scale to the combined business' bureau offering. It has a proven track record of developing tailored payments solutions for its customers, combining its multi-bank acquiring model with a strong risk and fraud management toolkit. The STP business has also been successful at growing its customer base with new merchants signed in the year including CN Rail, Canada's leading railroad provider; Espace Jeux, the online arm of LotoQuebec, the Quebecois state lottery operation; Enom (Demand Media) and Desjardins, a leading mid-market banking institution.

STP - Gateway

NETBANX processed $5 billion in transaction value in 2011 with over 44 million transactions completed, a substantial increase over 2010. Major customers using the gateway include Shop Direct Group, Ford Credit, MoreTh>n, nPower, RockChoir and TrendMicro. Reliability for the NETBANX platform throughout 2011 was exceptional at 99.99% uptime, especially relative to a number of other processors, meeting all of the Group's performance standards.

NETELLER SV

The NETELLER SV offering allows consumers to hold monetary value via an eWallet or card, such as a prepaid card, which can then be used to pay for transactions at merchants. The NETELLER eWallet, established in 1999, has attracted many millions of consumers who value simplicity, convenience, anonymity and security. Consumers deposit funds into their eWallet accounts via one of the many available payment options, such as credit or debit cards, internet bank transfer and vouchers, and then use those funds in the eWallet accounts at their chosen online merchants to pay directly for goods or services.

Our stored value business proposition combines the NETELLER eWallet with the award-winning Net+ Prepaid card. The Net+ card allows members to withdraw funds directly from their eWallet accounts via ATMs or to pay for goods and services anywhere MasterCard is accepted. The Net+ card is also available as a virtual card, so consumers can complete online transactions using funds directly from their eWallet anywhere MasterCard cards are accepted. This improves convenience and flexibility for consumers.

The focus for the NETELLER SV business has historically been the online gaming market since the eWallet has specific advantages in this market - segmenting consumers' funds, security and anonymity. The eWallet solution allows merchants to receive indemnified funds from a signed-up consumer ("member") in return for payment of a fee to NETELLER. Our pre-eminence in the online gaming market is demonstrated by the acceptance of the NETELLER eWallet by more than 2,000 online gaming merchants.

The Group won the prestigious "Best Payments Solutions Company" Award at the International Gaming Awards ceremony in London, and NETELLER was voted Best Payment System for Affiliates at the iGB Affiliate Awards, both in January 2012. Affiliates continue to offer a significant channel to build the NETELLER SV business, as our programme continues to offer best-in-class cash incentives to affiliates who refer customers to use NETELLER as their payment system of choice.

There is also potentially significant upside for the NETELLER SV business as a result of liberalisation of US regulations around online gaming. The Group also continues to investigate a white label offering for traditional retail merchants. These merchants can realise meaningful benefits, including increased customer loyalty and retention, from an online payments solution, that enables shopping on the move and effectively bridging the online and offline worlds.

Financial Review

The consolidated Group results for the year ended 31 December 2011 are presented below.

Highlights

The Group reported substantially improved EBITDA of $17.5 million, a 56% increase from $11.2 million in 2010. The increase was from organic revenue growth and the transformational acquisition of the business of OP Inc. on 1 February 2011. Fee revenues more than doubled to $126.8 million from $60.7 million in 2010. The acquisition materially diversified and broadened the Group's merchant base, provided a strong North American presence and considerably expanding online payment processing beyond a predominantly gaming focus. The Group's NETBANX STP division now represents over two thirds of the Group's revenues, up from a quarter in 2010, with the NETELLER SV business making up the balance. Revenues from the gaming sector now represent around 55% of Group revenues, compared to 90% in 2010.

The net loss for 2011 was $26.2 million which included $3.8 million related to amortisation of the assets acquired from OP Inc., interest on loans of $1.54 million, a supplementary management bonus of $3.0 million to former executives of OP Inc. and an impairment charge of $21.3 million against the NETELLER SV platform. Excluding these items, the Group reported an adjusted profit of $3.4 million compared to a net loss of $3.8 million in 2010.

Revenue

Revenues increased from $60.7 million in 2010 to $126.8 million in 2011, driven by strong growth in the NETBANX STP business, as a result of the OP acquisition and organic growth, particularly in the second half. Revenues for the second half of 2011 totalled $69.8 million, compared to $57.0 million for the first half.

NETBANX STP Revenue

Through its NETBANX brand, the Group is a leading provider of STP solutions to merchants worldwide, processing almost $7 billion in transaction value annually. NETBANX STP revenues of $86.8 million were $69.8 million (412%) ahead of the $17.0 million reported in 2010. Of this growth, $16.3 million came from organic growth from the existing NETBANX STP business while $53.5 million came from the acquired OP business. NETBANX earns fees for processing online transactions either as a fixed fee per transaction (the "gateway" model) or as a percentage of the transaction value (the "bureau" model, where the Group takes on the risk of managing the transaction process instead of an acquiring bank).

NETELLER SV Revenue

NETELLER SV revenue decreased slightly from $43.7 million in 2010 to $40.0 million in 2011 as market conditions for its online gaming related payment services continued to be challenging. However the 2010 comparative includes revenues from our Asian eWallet business which was shut down in Q1 2010 as we moved to an outsourced STP model. Adjusting for this, NETELLER SV revenues were in line with 2010. The 2011 total included approximately $2 million of revenue from the expiry of e-money balances which will not recur due to regulatory changes. Trends seen in 2011 included debit cards being offered as a free deposit option, as well as customers moving towards transacting directly in a wider range of currencies, with a resulting decrease in the Group's foreign exchange revenue. Steps continue to be taken to improve the growth trajectory of this business within the gaming sector and to pursue diversification outside of gaming.

Interest Income

Interest income was up in 2011 to $1.1 million as a result of improved market interest rates. Interest revenue is earned on the Group's cash and the cash held by the Group on behalf of merchants and members.

Group revenue - by business

($ millions) 2011 2010 % growth H1 2011 H2 2011 % growth

STP revenue 86.8 17.0 412 % 36.9 49.9 35 %

SV revenue (1) 40.0 43.7 -9 % 20.1 19.9 -1 %

Trading revenue 126.8 60.7 109 % 57.0 69.8 22 %

Interest 1.1 0.8 40 % 0.4 0.7 75 %

Total 127.9 61.5 108 % 57.4 70.5 22 %

(1) SV revenue for 2010 included $3.9 million of Asian eWallet revenue. Recategorising 2010 Asian eWallet revenues to STP to show the impact of the change of the Asian business model would have resulted in 2010 SV revenues of $39.8 million.

Group revenue - by geography

($ millions) 2011 2010 % growth

Europe 50.3 39.8 27 %

North America 39.0 - -

Asia Pacific 33.8 18.0 88 %

Rest of world 3.7 2.9 24 %

Trading revenue 126.8 60.7 109 %

Interest 1.1 0.8 40 %

Total 127.9 61.5 108 %

Gross margin

NETBANX STP Division

The blended NETBANX STP gross margin is 45%. The business acquired from OP Inc. is a slightly lower margin business than the STP business that existed within the Group prior to the acquisition, as the proportion of direct processing at 100% margin, is lower. Processing costs and bad debts are the only costs that are directly variable in line with revenues in the STP division. STP costs and bad debts were 55% and 0.1% of revenue respectively in 2011 compared to 42% and 2% in 2010.

NETELLER SV Division

The NETELLER SV gross margin is 85%. The principal direct costs of this division are transaction related fees and bad debts. Deposit and withdrawal fees arise on facilitating the movement and settlement of cash via the banking system and third party processors. These fees increased by 15% to $4.4 million in 2011 from $3.8 million in 2010, as a result of the successful addition of several new high cost deposit options to broaden the Group's offering to customers.

Operating expenses

General and administrative expenses (including fixed direct costs) increased 45% to $54.8 million from $37.8 million in 2010 as a direct result of the OP acquisition. In addition to the acquisition-related increase in operating expenses, the Group saw an increase in costs due to the Canadian dollar rising 4% relative to the US dollar in 2011. The majority of the salary and other costs for the Group are denominated in Canadian dollars due to concentration of employees in Montreal and Calgary. The Group implemented a supplementary bonus scheme for the senior management of OP Inc. to incentivise and reward them for delivering performance in excess of the contingent consideration thresholds. This scheme is based on EBITDA performance of the business acquired and applies in 2011 and 2012. The bonus payable for fiscal 2011 performance is $3.0 million.

Share Option Expense

Share option expense was in line with 2010 at $1.0 million (2010: $1.0 million). The Group continues to use share options and LTIPs to incentivise its employees and management team.

Foreign Exchange Gains

The results from the Group's subsidiaries in Canada and the UK are reported in local functional currencies. As required under IFRS, foreign exchange on consolidation of a subsidiary's balance sheet is captured in equity, but the subsidiary's individual exposure to foreign currency is captured in income. The Group employs forward exchange contracts to mitigate exposure of financial risk associated with foreign currency balances. During 2011, foreign exchange gains of $1.3 million were generated compared to foreign exchange losses of $1.3 million in 2010. Large balances in a number of currencies are held on deposit for members and merchants and these balances fluctuate due to members and merchants not always choosing to deposit and withdraw funds in the same source currency. While these tendencies benefit the Group through the generation of foreign exchange revenue, it is impossible to perfectly predict balances to hedge.

Depreciation and amortisation

Depreciation and amortisation of $16.7 million in 2011 (2010: $6.6 million) included $12.9 million of amortisation of intangible assets (2010: $3.6 million) and $3.8 million in depreciation of capital assets (2010: $3.0 million). Approximately $3.8 million of the depreciation and amortisation charge in 2011 relates to the assets acquired through the acquisition of OP Inc. The Group's new NETELLER SV platform was launched at the end of 2010 and is being amortised over five years on a straight line basis and accounts for a large proportion of the increase in the amortisation charge.

Impairment

An impairment charge of $21.3 million has been made in 2011 against the NETELLER SV platform. Between 2008 and 2011 considerable investment was made in building an entirely new platform for the NETELLER SV business. This was to provide a stable, scalable platform to enable future growth. While the platform has achieved this aim, new features could not be added until the new platform was released, which resulted in revenues lower than were anticipated at the outset due to the longer than expected development cycle. Market conditions in the online gaming sector have become more challenging over the course of the platform development interval.

Taking the above factors into account, management determined that the carrying value of the NETELLER SV platform may not be supported based on the projected revenues of the business. Accordingly, a prudent view has been adopted in writing down the intangible asset value. The substantial investment in the new platform was completed in Q1 2012 and the size of the development team has been significantly reduced. Therefore there will be a considerable reduction in capitalised costsgoing forward.

Restructuring costs

Restructuring costs are $1.6 million in 2011 (2010: $3.4 million). This amount included severance paid to employees as a result of the combination of the two businesses and our business transformation initiatives where a number of employees, including the former CEO, left the business in July 2011.

Taxes

The tax model is based on the mark-up of services provided by various subsidiaries to the Group's parent in the Isle of Man, where source revenues are non-taxable because of the zero rate of tax on companies other than banks. The 2011 provision for income taxes includes a recovery of $0.03 million (2010: $0.1 million recovery).

Balance sheet

Cash

The gross quantum of cash available to the Group totalled $69.1 million at 31 December 2011. This included cash and cash equivalents plus restricted cash surpluses and the excess of qualifying liquid assets held in respect of e-money issued to members over balances payable. This compared with $64.2 million at 31 December 2010. These cash figures are before the deduction of current liabilities. The Group's cash position at 31 December 2011 was $43.6 million (2010: $54.1 million), after deducting merchant cash balances of $25.5 million (2010: $10.1 million).

The cash and cash equivalents balance at 31 December 2011 of $58.0 million represent the unrestricted cash of the Group (2010: $51.1 million). Included in cash and cash equivalents is a transient cash balance totalling $25.5 million that relates to merchant transactions processed via the NETBANX gateway operations and security deposits held from OP bureau merchants. These gateway operations do not fall within the EU definition of "e-money" nor does a legal right of offset exist between this cash and the corresponding merchant liabilities. The cash and the merchant liabilities relating to gateway operations and merchant security deposits are therefore both recognised on the face of the balance sheet as cash and cash equivalents and trade and other payables respectively.

Member funds:In compliance with FSA rules and regulations, the Group held qualifying liquid assets at least equal to the amounts owing to members. These amounts are maintained in accounts which are segregated from operating funds. All Qualifying Liquid Assets are held in Neteller (UK) Ltd, which is an FSA regulated entity. These Qualifying Liquid Assets and the amounts payable to members are reported gross on the balance sheet.

Merchant funds:The Group maintains bank accounts which are segregated from operating funds and which contain funds held on behalf of merchants, representing pooled merchant funds. The bank accounts are designated as segregated client accounts. Balances in the segregated client accounts are maintained at a sufficient level to fully offset amounts owing to the Group's merchants. A legal right of offset exists between the balances owing to the merchants and the cash balances segregated in the client accounts. As such, only the net balance of surplus cash is disclosed on the balance sheet as Restricted Cash. The Group, as a matter of policy, holds small amounts of excess cash in the account to ensure intraday balance movements do not result in a shortfall in the cash position. The net excess is disclosed as a corporate asset.

Intangible assets

The net book value of intangible assets at 31 December 2011 was $32.8 million compared to $37.0 million as at 31 December 2010. This includes the assets acquired from OP Inc on 1 February 2011 for $50.0m. Management considered that the carrying value of these acquired assets did not need to be impaired. During the year, the Group incurred significant development costs on completing the new NETELLER SV platform. Upon completion of a discounted cash flow analysis management determined that an impairment charge of $21.3 million was appropriate in relation to this platform, as set out above.

Liabilities

The Group has convertible shareholder loans of $8.4 million (including accrued interest) and convertible loans and holdbacks payable to the vendors of OP Inc. totalling $22.8 million. Further information regarding these liabilities is set out in Note 29 of the Group's financial statements.

Total current liabilities have increased by 20% to $144.0 million at 31 December 2011, up from $119.3 million at the end of 2010. The balance includes $97.7 million due to all members being held in the FSA regulated Neteller (UK) Ltd (2010: $96.2 million). The increase in total current liabilities is partially explained by the business model of the acquired OP Inc. which held merchant deposits of $9.9 million at 31 December 2011 as security against bad debts from its merchants.

Off balance sheet arrangements

As of 31 December 2011, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Notes to Consolidated Financial Statements for the Year ended 31 December 2011

1. GENERAL

NETELLER plc (the "Company") was a private company incorporated under the laws of the Isle of Man ("IOM") on 31 October 2003 and was registered as a public company on 1 April 2004. NETELLER plc changed its name to NEOVIA Financial Plc on 17 November 2008. On 1 March 2011 NEOVIA Financial Plc changed its name to Optimal Payments Plc. The principal activities of the Company and the Group are described in Note 2. The Group includes the Company and its wholly owned subsidiaries as set out under "Principles of consolidation" in note 3 and "Subsidiaries" in note 22.

These financial statements are presented in US dollars ("$") which is the Company's functional currency.

At 31 December 2011, the Group had 387 employees (2010: 309 employees).

2. NATURE OF OPERATIONS

The Group provides services to businesses and individuals to allow the processing of direct debit, electronic cheque and credit card payments. The Group processes direct debit, electronic cheque and credit card payments principally for internet Merchants. NETELLER (UK) Ltd (a wholly-owned subsidiary of Optimal Payments Plc) is authorised by the Financial Services Authority under the Electronic Money Regulations 2011for the issuing of electronic money.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with applicable IOM law and International Financial Reporting Standards ("IFRS").

The consolidated financial statements were authorised for issue by the Board of Directors on 28 March 2012.

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

·; derivative financial instruments are measured at fair value

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities. The following principal accounting policies have been applied:

Changes in accounting policies

From 1 January 2010 the Group has applied IFRS 3 Business Combinations (2008) in accounting for business combinations. The change in accounting policy has been applied prospectively and has had no material impact on earnings per share.

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

Acquisitions on or after 1 January 2010

For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:

·; The fair value of consideration transferred; plus

·; The recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of existing equity interest in the acquiree; less

·; The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed

When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

When share based payments awards (replacement awards) are required to be exchanged for awards held by the acquiree's employees (acquiree's awards) and relate to past services, then all or a portion of the amount of the acquirer's replacement awards is included in measuring the consideration transferred in the business combination. The determination is based on the market based value of the replacement awards compared with the market based value of the acquiree's awards and the extent which the replacement awards relate to past and/or future service.

Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (and its subsidiaries) as at the year end. Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its principal wholly owned subsidiaries, NETELLER Operations Limited, NetAdmin Limited, Net ID Limited, NT Services Limited, NETELLER (UK) Ltd, NetBanx Limited, Charter Access Limited, 1155259 Alberta Limited, NT Services Building Corporation, NETELLER Express Limited, Cardload Incorporated, NETBX Technologies Incorporated, NETBX Services Incorporated, NBX Merchant Services Incorporated, NBX Checkout Incorporated, NBX Merchant Services Corporation and Optimal Payments (UK) Limited. All inter-company transactions and balances between Group enterprises are eliminated on consolidation.

In the non-consolidated financial statements of the Company, investments in subsidiaries are stated at cost.

Cash and cash equivalents

Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Intangible assets

Intellectual property is recorded at cost and is amortised on a straight-line basis over its estimated useful life which is assessed to be three to five years.

Website and platform development costs are recorded at cost and amortised over their estimated useful life using the declining-balance method at 30%. On 21 September 2010, the new NETELLER Stored Value platform went live and all associated costs specifically related to this are amortised over 5 years on a straight-line basis.

Property, plant & equipment

Land is not depreciated. Property, plant & equipment are recorded at cost and are amortised over their estimated useful lives, using the declining-balance method, on the following basis:

Communication equipment 20%

Furniture and equipment 20%

Computer equipment 30%

Other assets are depreciated over their estimated useful lives, using the straight-line method, on the following basis:

Computer software 2 years

Building & Leasehold Improvements 4% and 10 years respectively

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

Impairment

The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amounts.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from synergies of the combination.

The Group's corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.

Impairment losses are recognised in the Statement of Comprehensive Income. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

The Group performs goodwill and intangible impairment tests at least annually or whenever events or changes in circumstances indicate that the goodwill and intangible carrying value for a business unit may not be recoverable.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of subsidiaries at the date of acquisition.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the Statement of Comprehensive Income and is not subsequently reversed.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Receivable from Merchants

Trade and other receivables, including receivables from Merchants, are stated at their amortised cost less impairment losses and doubtful accounts.

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in the Statement of Comprehensive Income except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

The Group uses the balance sheet liability method of accounting for income taxes. Temporary differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the balance sheet are used to calculate deferred tax assets or liabilities. Deferred tax assets or liabilities are calculated using tax rates anticipated to exist in the periods that the temporary differences are expected to reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group's CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Revenue recognition

The Group is involved in transaction processing services. Revenues from transaction processing services are recognised at the time services are rendered. Member revenue is recognised either as a fee calculated as a percentage of funds processed or as a charge per transaction, pursuant to the respective Member agreements. Merchant revenue is recognised as a fee calculated as a percentage of funds processed or as a charge per transaction on behalf of Merchants.

Interest income is accrued on a monthly basis, by reference to the principal outstanding and at the effective interest rate applicable.

Leases

All leases are classified as operating leases unless noted as the terms of the lease do not transfer substantially all the risks and rewards of ownership to the lessee. Payments made under operating leases are recognised in the Statement of Comprehensive Income on a straight-line basis over the term of the lease.

Foreign exchange

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States dollars, which is the functional currency of Optimal Payments Plc, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the Statement of Comprehensive Income for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Related party transactions

Monetary related party transactions in the normal course of operations are recorded at fair value, and transactions between related parties, not in the normal course of operations, are recorded at the carrying value as recorded by the transferor.

Use of estimates

The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group's financial statements include depreciation and amortization, impairment testing of long-lived assets, share based payments and income taxes. By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.

Foreign exchange contracts

The Group uses foreign exchange contracts to reduce its exposure to adverse fluctuations in foreign exchange rates. These financial instruments are presented in the accompanying consolidated financial statements at fair value. Fair values are based on market quotes, current foreign exchange rates or management estimates, as appropriate, and gains and losses on the foreign exchange contracts are reflected in the consolidated income statement. The increase or decrease in the fair value of the contracts has been taken to income.

Research and development

Research expenditure is written off to the income statement in the period in which it is incurred.

Development expenditure is written off in the same way unless management is satisfied as to the technical, commercial and financial viability of the individual projects generating future economic benefits, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. In this situation, the expenditure is capitalised at cost, less a provision for any impairment in value, and is amortised on the commencement of use over the period in which benefits are expected to be received by the Group. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.

Share-based payments

The Company issues share options to certain employees, including Directors. Share options are measured at fair value at the date of grant. The fair value determined at the grant date of the share option is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. Fair value is measured using the trinomial lattice pricing model. When necessary, the expected life used in the model is adjusted, based on management's best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Offsetting

Financial assets and liabilities are set off and the net amount presented in the Statement of Financial Position when, and only when, the Group has a legal enforceable right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Group's trading activity.

Restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held and for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2011, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except for IFRS 9 Financial Instruments, which becomes mandatory for the Group's 2013 consolidated financial statements and could change the classification and measurement of financial assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.

4. RESTRICTED MERCHANT CASH

The Group maintains bank accounts with the Company's principal bankers which are segregated from operating funds and which contain funds held on behalf of Merchants, representing pooled Merchant funds. Balances in the segregated accounts are maintained at a sufficient level to fully offset amounts owing to the Group's Merchants. A legal right of offset exists between the balances owing to the Merchants and the cash balances segregated in the client accounts. As such, only the net balance of surplus cash is disclosed on the Statement of Financial Position.

At 31 December 2011, the Group had the following balances:

At 31 December 2010, the Group had the following balances:

5. QUALIFYING LIQUID ASSETS HELD FOR MEMBERS

In compliance with the Financial Services Authority (FSA) rules and regulations, the Group holds Qualifying Liquid Assets at least equal to the amounts owing to Members. These amounts are maintained in accounts which are segregated from operating funds.

All Qualifying Liquid assets are held in Neteller (UK) Ltd, which is an FSA regulated entity. Effective 1 December 2010, all non-European Member balances were transferred to Neteller (UK) Ltd.

The Group had the following balances:

6. RECEIVABLE FROM MERCHANTS

The Group had the following balances:

Receivable from Merchants consists of balances due that are in the process of collection. The net receivable from Merchants represents the amounts which are expected to be collected through the normal course of business.

7. PROPERTY, PLANT & EQUIPMENT

The Group had the following balances:

2011

The Group disposed of the below intangibles and property, plant and equipment:

2010

The Group disposed of the below intangibles and property, plant and equipment:

8. INTANGIBLE ASSETS

The Group had the following balances:

Impairment Analysis

Included in the website and platform development is an amount of approximately $48.3 million recognised for the total cost of development of the Group's NETELLER Stored Value platform less $15.0 million of accumulated amortisation which results in a net book value of approximately $33.3 million before impairment.

The Board has determined the recoverable amount of the NETELLER platform based on value-in-use calculations. Those calculations use cash flow projections based on actual operating results. A pre-tax discount rate of 12% has been used in discounting the projected cash flows, while a terminal growth of 2.93% is assumed each year.

The Board believes that based on the analysis prepared, an impairment charge of $21.3 million was required as the cash-generating unit's carrying amount exceeded its recoverable amount. The NETELLER platform's cash flow projections were impacted by continued margin pressure, regulatory changes, and modest budgeted growth.

Asset Purchase

The Company acquired a customer list pertaining to specific merchants in the year ended 31 December 2011 for $3,485,804 which are included in additions of intellectual property in the table above. Of this balance $218,846 has been paid resulting in total contingent consideration of $3,266,958 of which $1,466,958 relates to the current balance payable and $1,800,000 is included in non current liabilities. See Note 25 for more information.

9. GOODWILL

The Group had the following balances

The Group performs goodwill and intangible asset impairment tests at least annually or whenever events or changes in circumstances indicate that the goodwill and intangible carrying value for a business unit might not be recoverable. The recoverable amount is defined as the higher of fair value less costs to sell and value in use.

10. TRADE AND OTHER PAYABLES

The Group had the following balances:

Included in Group accounts payable are Merchant processing liabilities arising from the gateway operations of NetBanx totaling $15,592,940 (2010: $10,060,693). In addition, included in cash and cash equivalents is a transient cash balance that relates to Merchant transactions processed via the gateway operations. The gateway operations do not fall within the EU definition of "e-money" nor does a legal right of offset exist between this cash and the corresponding Merchant liabilities. Also included in the Group accounts payable are security deposits held on behalf of merchants of the acquired Optimal Payment Inc. business totaling $9,448,072 (2010:$0).

11. TAX

The Company is incorporated in the IOM and is subject to a tax rate of zero percent and accordingly pays no tax in the IOM. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The charge for the year can be reconciled to the loss shown per the Statement of Comprehensive Income as follows:

At 31 December 2011, foreign taxes of $2,236,807 (2010: $1,840,169) were outstanding.

12. SHARE CAPITAL

In the year ended 31 December 2011, the Group issued 6,391,423 ordinary shares for a total value of $1,019.

Holders of the ordinary shares are entitled to receive dividends and other distributions, to attend and vote at any general meeting, and to participate in all returns of capital on winding up or otherwise.

Holders of the deferred shares are not entitled to vote at any annual general meeting of the Company and are only entitled to receive the amount paid up on the shares after the holders of the ordinary shares have received the sum of £1,000,000 for each ordinary share held by them and shall have no other right to participate in assets of the Company.

13. TRANSLATION RESERVE

Exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into US dollars are brought to account by entries made directly to the foreign currency translation reserve.

14. SEGMENTED REPORTING

The Group has two segments as disclosed below. For each of the segments, the Group's CEO reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group's reportable segments.

Stored Value (SV): fees are generated on transactions between Members and Merchants using the NETELLER e-Wallet and Net+ prepaid cards.

Straight Through Processing (STP): fees are generated through the Netbanx and Netbanx Asia gateway platforms where customers send money directly to Merchants.

Information regarding the results of each reportable segment is included below.

Segmented reporting for 2011:

Segmented reporting for 2010:

Processing costs and bad debt are the only two costs which vary directly with revenue, and accordingly have been shown separately as variable costs. For 2011, variable costs for Stored Value and Straight Through Processing were 15% (2010: 11%) and 55% (2010: 44%) of revenue respectively.

Major Merchants

The Group has one Merchant who represents 20.5% (2010: 17%) of total fee revenue across all reportable segments and geographies. The majority of this revenue comes from Asia.

15. MARKETING AND PROMOTIONS

Total marketing and promotions including advertising costs for the year were $2,988,834 (2010: $1,298,256). These consisted of targeted VIP rebates, fee rebates, prizes awarded to contest winners, advertising and tradeshows.

16. DEPRECIATION AND AMORTISATION

Depreciation and amortisation on the acquired assets amounted to $3,834,030 in 2011 (2010: $0). See Note 29 for further information.

17. RESTRUCTURING COSTS

The Group incurred restructuring costs relating the reorganisation of its cost structure. Severance was paid to employees as a result of operational changes to the Group's business in order to streamline operations and remain competitive in challenging markets. Additional restructuring costs were incurred in both 2010 and 2011 for specific persons hired to reorganise the business, lease impairment costs and various related legal fees.

The Group incurred the following costs:

18. LOSS PER SHARE FROM CONTINUING OPERATIONS

The calculation of the basic and diluted loss per share is based on the following data:

19. OPERATING LEASE ARRANGEMENTS

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments, which fall due as follows:

Operating lease payments represent rentals payable by the Group for certain of its office properties. Current leases have a remaining average life of 1.25 years. The lease payments recognised in expense for the year are $1,611,054 (2010: $1,910,846).

20. SHARE BASED PAYMENTS

The Company's share option plan was adopted pursuant to a resolution passed on 7 April 2004 and amended by the Board on 15 September 2008. The 2008 amendment included the addition of a new 'approved' plan for UK based employees. Under the 'approved' and 'unapproved' plans, the Board of Directors of the Company may grant share options to eligible employees including directors of Group companies to subscribe for ordinary shares of the Company.

No consideration is payable on the grant of an option. Options may generally be exercised to the extent that they have vested. Options vest according to the relevant schedule over the grant period following the date of grant. Typically, options have been granted for a three and a half year grant period and have vested in equal thirds on or about the anniversary of the grant date. The Directors are permitted under the Plan Rules to alter the vesting schedule and the grant period. The exercise price is determined by the Board of Directors of the Company, and shall not be less than the market value at the date of grant. The option plan provides for a grant price to equal the average quoted market price of the Company shares on the three days prior to the date of grant. Subject to the discretion of the Board share options are forfeited if the employee leaves the Group before the options vest. A participant of the share option plan has 30 days following the date of grant to accept or surrender the option and if surrendered, the option will not be deemed granted. Options recorded under share option expense may not agree to the total options granted in the period. The accounting for options coincides with the day following the last day for acceptance of the option, which is subsequent to their date of grant.

In 2011 a grant of options over the Company's ordinary shares was made to all the Group's employees (except those participating in the Company's Long Term Incentive Plan ("LTIP"). A total of 1,173,200 options with an exercise price of £0.5667 were accepted on 31 January 2012, with 976,800 options under the Company's unapproved scheme and 196,400 options under the Company's approved scheme.

On 15 April 2011 a total of 2,075,351 options granted on 30 October 2007 with an exercise price of £0.73 expired and on 21 May 2011 a total of 110,292 options granted on 21 November 2007 with an exercise price of £0.72 expired. A total of 12,000 options granted on 30 October 2007 with an exercise price of £0.73 and 426,950 of options granted on 05 December 2008 with an exercise price of £0.53 were forfeited during the year ended 31 December 2011.

On 14 April 2010 a total of 2,369,157 options granted on 20 November 2006 with an exercise price of £1.38 expired.

The Company adopted a LTIP which took effect from 1 January 2010. On 1 April 2011, certain executives of the Group were awarded 3,600,063 LTIP options to acquire ordinary shares in the Company for £0.0001 per share. On 11 October 2011 a further 112,944 LTIP options were awarded under the same terms. These LTIP options vest in one tranche based on future performance related to EBITDA targets for the financial year ending on 31 December 2012.

Equity-settled share option plan

The options outstanding at the end of the period had a weighted average remaining contractual life of 0.93 years (31 December 2010: 1.18 years).

The weighted average exercise price of options exercised in 2011 based on the date of exercise was £0.55.

The options granted under the 2008 and 2009 share-based payment plan were valued using a trinomial lattice model to reflect factors including employee exercise behaviour, option life and option forfeitures.

The inputs into the model are as follows:

Expected volatility was determined by calculating the historical volatility of the Company's share price from the time of issue to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Given the nature of the performance conditions, the options granted under the 2010 share-based payment plan are recognised when these conditions are met using the then prevailing share price. In addition to the 2010 share-based payment plan, the Company granted awards over 87,146 shares of the Company under the LTIP plan to Mark Mayhew, former CEO and 300,000 shares to two other employees for a total expense of $311,116 during fiscal 2010

The Company recognised total expenses of $1,007,359 (2010: $985,203) related to the equity-settled share-based payments transactions in 2011. 

21. FINANCIAL INSTRUMENTS

Financial instruments consist of cash and cash equivalents, restricted cash, qualifying liquid assets held for Members, receivable from Members, trade and other receivables, payable to Members and Merchants, payable to Members and trade and other payables. All financial instruments are classified as held for trading except for accounts receivable and accounts payable which are classified as loans and receivables.

i) Fair values

The fair values of cash and cash equivalents, restricted cash, Qualifying Liquid Assets held for Members, receivable from members and Merchants, trade and other receivables, payable to Members and trade and other payables approximate the carrying values due to the short-term nature of these instruments.

The fair value of property, plant, and equipment recognised as a result of a business combination is the estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, property, equipment, fixtures and fittings is based on the market approach and cost approaches using the quoted market price for similar items when available and replacement cost when appropriate. Depreciated replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payment that has been avoided as a result of the patent or trademark being owned. The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

The fair value of foreign exchange contracts are marked to market each reporting period using the period end rates based on quoted prices (unadjusted) in the active market. The Group does not carry any other financial instruments at fair value.

ii) Credit risk and concentrations

The Group is exposed to credit risk to the extent that its members may charge back credit card purchases. The Group manages the exposure to credit risk by employing various online identification verification techniques, enacted transaction limits and having a significant number of members and Merchants. As these members are geographically widespread and the Merchants are active in various industries, the exposure to credit risk and concentration is mitigated. The maximum credit exposure within the Group is $3,517,491.

iii) Interest rate risk

The Group is exposed to interest rate risk to the extent that investment revenue earned on cash and cash equivalents, client account funds, and Qualifying Liquid Assets held for Members is subject to fluctuations in interest rates. The Group's exposure to interest rate risk is limited as investments are held in liquid and short-term funds. A 1% increase in interest rates offered would result in an increase of $1,020,527 of interest income while a 1% decrease would result in a reduction to interest income in the amount of $832,313.

iv) Currency risk

The Group is not significantly exposed to foreign currency exchange risk, as the majority of the transactions are denominated in US dollars. The Group manages the exposure to currency risk by commercially transacting in US dollars and by limiting the use of other currencies for operating expenses, thereby minimising the realised and unrealised foreign exchange gain/(loss). Where limited exposures exist, these are managed through entering into forward foreign exchange contracts as appropriate (Note 3). Due to the significant amount of balances held in various currencies, the potential impact of a 1% change in exchange rates is not quantifiable.

v) Market segment risk

Market segment risk may arise due to adverse changes in legislation relating to internet, payment processing or on-line gambling. The Group is exposed to market segment risk to the extent that legislation impacts operational presence and related revenue streams, which may be significant. The Group manages this exposure through geographical diversification and participation in non gambling sources of revenue. The Group closely monitors local legislation in key markets (new or existing) and does not have economic reliance on any one country.

vi) Liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group's major exposure relates to trade payables and amounts owed to Members. Trade payables are short-term in nature. Amounts owed to Members are fully supported by qualifying liquid assets (see note 5 for further details). Management controls and monitors the Group's cash flow on a regular basis, including forecasting future cash flows. 

vii) Risk management assets and liabilities

Risk are identified, evaluated and mitigated through a combination of a "top down" approach driven by both the Audit Committee and Board of Directors. These are aggregated into a Risk Management framework where the risks are prioritised and assigned to the executive for monitoring and risk mitigation. The Group Internal Audit function undertakes regular reviews of the controls that are in place to mitigate risk. The Group enters into financial instruments through forward currency contracts that fix the net asset or liability position for significant currencies held on the Statement of Financial Position.

viii) Capital disclosure

The Group's capital structure is comprised of shareholders' equity plus shareholder loans and contingent consideration as required to fund the asset acquisition. The Group's objective when managing its capital structure is to finance internally generated growth and maintain financial flexibility including access to capital markets. To manage its capital structure the Group may adjust capital spending, issue new shares, or acquire short-term financing.

22. SUBSIDIARIES

Details of the Company's principal subsidiaries as at 31 December 2011 are as follows:

23. INTERCOMPANY BALANCES

Details of the Company's intercompany balances are as follows:

24. INTERCOMPANY TRANSACTIONS

Details of the Company's intercompany transactions are as follows:

A portion of the Stored Value fees as noted in the Company financial statements represent transaction fees earned in the Company's wholly owned subsidiary Neteller Operations Limited, which was an e-money issuer to non-European Members until December 2010 and thereafter principally a Merchant payment service business. The Company holds trust account funds and balances owing to Merchants on behalf of Neteller Operations Limited. All revenues are transferred to the Company in exchange for transaction and processing services. Neteller Operations Limited is a company registered in the Isle of Man and incorporated on 23 December 2005.

NetAdmin Limited, a wholly owned subsidiary of the Company, is a company registered in the Isle of Man and incorporated on 23 December 2005. NetAdmin Limited provides employment and administration services to the Company. All expenses incurred in NetAdmin Limited are charged to the Company at cost. These expenses were recognised in the Company income statement.

Net ID Limited, a wholly owned subsidiary of the Company, is a company registered in the Isle of Man and incorporated on 11 April 2006. Net ID Limited provides identification verification services to the Company. All expenses incurred in Net ID Limited are charged to the Company at cost. These expenses were recognised in the Company income statement.

25. RELATED PARTIES

During the year, the Group and Company entered into the following transactions with related parties who are not members of the Group or Company:

JAC Group Holdings Limited was a related party of the Group and Company as Mark Mayhew, a director and shareholder of JAC Group Holdings Limited, was a Director of the Company from 1 September 2009 until 31 July 2011. A subsidiary of JAC Group Holdings Limited provided travel and related booking services to the Group and all transactions were at fair market value.

On 1 April 2011, 9185-2780 Quebec Inc which was owned by a related party, Martin Leroux, a shareholder of the Group sold certain merchant contracts to the Company at fair market value. The balance payable will be settled in shares based on the lesser of £0.626990 per share or the closing price on the day before the business day of settlement. The settlement will be completed in two separate instalments. The first balance owing in the amount of $1,466,958 in equivalent shares is outstanding and payable based on performance conditions satisfied in 2011. The second balance owing in the amount of $1,800,000 will be payable when established 2012 performance conditions are satisfied.

During the year two shareholders, Aurum Nominees Ltd and IIU Nominees Ltd loaned the Company $4,000,000 each to fund the asset acquisition, see note 29 for details.

26. CONTINGENT LIABILITIES

From time to time the Group is subject to legal claims and actions. The Group takes legal advice as to the likelihood of success of the claims and actions and no provision or disclosure is made where the Directors feel, based on that advice, the action is unlikely to result in a material loss or a sufficiently reliable estimate of the potential obligation cannot be made.

As at 31 December 2011, NetBanx Limited, a wholly owned subsidiary, has net current liabilities. Optimal Payments Plc will continue to provide financial support to enable NetBanx Limited to meet its existing and future liabilities and continue as a going concern.

27. EBITDA

EBITDA is defined as results of operating activities before depreciation and amortisation and exceptional non-recurring items which are defined as items of income and expense of such size, nature or incidence, that in the view of management their disclosure is relevant to explain the performance of the Group for the period.

EBITDA is not a financial measure calculated in accordance with IFRS. The presentation on these financial measures may not be comparable to similarly titled measures reported by other companies due to the differences in the ways the measures are calculated.